GM to buy Ally's Europe, LatinAm ops

General Motors' financing arm GM Financial has agreed to pay about $4.2 billion for the European and Latin American auto lending operations of Ally Financial. (Reuters)

SummaryAlly announced the plan to sell its international operations in May.

its finance activities in North America.

The deal is expected to add $300 million to $400 million to GM Financial's annual earnings before taxes.GM expects to contribute about $2 billion in cash to GM Financial to fund the purchase, the automaker said in a separate statement.

The U.S. automaker bought AmeriCredit Corp in 2010 and in August disclosed it was among the bidders for Ally's international operations. GM and Cerberus remain Ally shareholders.

Ally said its combined operations in Europe and Latin America represented about $16.1 billion in assets at the end of the third quarter.

Of the $17 billion it owes the U.S. government, Ally has paid back $5.8 billion, including dividend payments.

The company is focusing on U.S auto lending and banking to turn its business around. In May, its Residential Capital (ResCap) mortgage unit filed for bankruptcy, and on Wednesday a bankruptcy court judge approved the sale of its mortgage operations to Ocwen Financial Corp and Walter Investment Management Corp for $3 billion.

ResCap is also selling a loan portfolio to Warren Buffett's Berkshire Hathaway Inc for $1.5 billion.